DARMSTADT (dpa-AFX) – Software AG (Software) wants to accelerate its growth again after a weak year. The operating result should also increase again after a decline, the company announced when presenting preliminary figures on Thursday in Darmstadt. The management around CEO Sanjay Brahmawar continues to see the digital division as a driver. But the database business is also expected to recover in 2022 after a significant decline.
The statements were well received on the stock market – also because the numbers, especially in the fourth quarter, were slightly better than expected. The stock, which was recently under a lot of pressure, temporarily gained seven percent in a weaker market environment in the morning before giving up part of the gains again. With an increase of over five percent, however, it was still at the top of the few MDAX winners (MDAX)
With the results, the company has exceeded expectations, noted Baader Bank analyst Knut Woller in an initial reaction. “The profitability was a positive surprise”. The software developer’s targets for the current year are also better than the consensus estimates. Warburg analyst Andreas Wolf also described profitability in the final quarter as strong.
The cloud-based products drove the switch to subscription contracts, which improved the quality of sales, reported CEO Brahmawar in an analysts’ conference. Growth in the important digital business with software for the integration of IT systems accelerated significantly in the last three months of the year compared to the weaker third quarter. According to the manager, the business deals that had been postponed in the previous quarter could now have been realised.
Software AG carried the momentum into the new year. The company also expects accelerated growth overall for 2022. Currency-adjusted product sales are forecast to be seven to eleven percent higher compared to an increase of three percent in 2021. Software AG expects order intake in its digital division to continue to rise by 15 to 25 percent. The database business should recover after a significant decline in the past year, and bookings should develop in a range from stable to five percent plus.
The adjusted operating margin (EBITA) should improve in the group to 20 to 22 percent. In the previous year, it had fallen to 19.6 percent, which was better than the company had last promised. The company confirmed its medium-term goals for 2023, which include an increase in consolidated sales including services to one billion euros. Last year, Software AG came up with just under 834 million euros.
In the final quarter, sales, earnings and the operating margin fell again. New business in the database division fell by almost 40 percent, and product sales also fell sharply by 22 percent. In contrast, the digital business was able to increase bookings by 19 percent and product sales by six percent. The bottom line for Software AG was a profit of 34.8 million euros, 30 percent less than in the previous year./nas/zb/eas
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